Over the last few years the AIM market has been extremely successful in attracting new businesses who wanted the advantages of a listing without a heavy regulatory burden. In the current economic climate, whilst the number of IPOs has declined significantly, the flexibility offered by AIM in secondary market activity, takeovers and fundraising is helping AIM listed companies to continue with their growth plans.
The AIM rules require the disclosure of certain corporate transactions but whilst the size of transactions that require to be disclosed are similar to that on that on the Full List, shareholder approval is only required if the transaction itself qualifies as a reverse takeover or is a disposal leading to a fundamental change in business. The ease with which companies can raise additional funds on AIM compared with on the full list or US or another markets around the world, has ensured AIM's continuing appeal even during the current economic turbulence. From January 2008 to June 2008, secondary fundraisings on AIM trebled to £2,649.3 million whereas IPOs were less than half that figure.
Consolidation amongst AIM companies is likely to become more attractive as a gap is opening up on the market between well financed high growth companies and the smaller end of the market where companies struggle to raise additional funding. Large investors often look to invest in larger and more secure companies, so for some of the smaller AIM companies either being taken over or going private is the only logical option. Many advisors are now suggesting to clients of a sufficient size that despite the additional cost and regulatory burden rather than stay on or list on AIM they should go for the full list to increase company profile and trading volumes. Their view is that in order to attract additional investment more easily a full listing will be beneficial. Whilst in certain circumstances this may be true, the flexibility and limited regulation that AIM offers should not be underrated and companies should think carefully before incurring the additional initial and ongoing costs of a full listing.
In troubled times, AIM still has much to offer companies looking for a regulatory approach that allows maximum flexibility for obtaining such funding with minimal regulations and initial costs.
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